Brookfield Residential (Alberta) LP (Carma Developers LP) v Imperial Oil Limited, 2017 ABQB 218

Court of Queen’s Bench of Alberta Citation: Brookfield Residential (Alberta) LP (Carma Developers LP) v Imperial Oil Limited, 2017 ABQB 218 Date: 20170328 Docket: 1203 06749 Registry: Edmonton Between: Brookfield Residential (Alberta) LP formerly known as Carma Developers LP Plaintiff - and - Imperial Oil Limited, Larry C.M. Darling, Hoggan Engineering & Testing

(1980) Ltd., and Ecomark Ltd. Defendants ______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Robert A. Graesser _______________________________________________________ Introduction [ 1 ] In this action, Brookfield Residential (Alberta) LP has sued Imperial Oil Limited for contaminated soil on property it purchased, allegedly arising from an oil well drilled by Imperial in 1949. It is not disputed that the property has been contaminated by substances associated oil wells.

Brookfield has sued other defendants as well, but this decision discusses only Imperial’s liability to Brookfield. The roles of others are described, but only for the purposes of the applications before me. [ 2 ] Imperial brought a

summary dismissal application, asserting a limitations defence under the Limitations Act , RSA 2000, c L-12, and claiming it owed no duty of care to Brookfield. Brookfield cross-applied under s 218 of the Environmental Protection and Enhancement Act , RSA 2000, c E-12 ( EPEA ) for an extension of the applicable limitation period against Imperial, asserting that the adverse effect to its property occurred while Imperial had an interest in the lands, that Brookfield exercised due diligence in ascertaining the presence of the adverse effect, and that Imperial would not be prejudiced by extending the limitation period.

Facts [ 3 ] The basic facts are not contested. At issue are a property purchased by Brookfield legally described as: Legal Subdivision 15 Range 25, Township 51

Section 14 NE ¼

section West of the 4th Meridian, Excepting subdivided lands

a) Plan 0023734 and

b) Plan 0326012 (the Property), and a well on the Property discovered in the course of investigations into soil contamination, identified as ID 00/15-14-051-25W4 (the Well). Historical background [ 4 ] In early 1949, Imperial, under a Well License issued January 1949, drilled the Well on the Property. The Property was then owned by the Defendant, Larry C.M. Darling. [ 5 ] Historical records indicate that after the Well was completed, a series of Drill Stem Tests were conducted. Those tests produced various amounts of hydrocarbons, water containing gases, and salt water.

The records do not indicate how those fluids were dealt with, although there is some suggestion from Brookfield’s expert witness that the practice at the time was to divert these fluids to the drilling sump or flare pit on the Property. [ 6 ] By March 1949, Imperial was operating a flowing oil well and an associated drilling waste disposal area (sump). In or around November 1949, Imperial constructed and installed a battery at the Well site and an associated sump pump. It also ordered a salt water storage tank. [ 7 ] There is some disagreement as to when Imperial disposed of its interest in the Well.

Imperial says it assigned its surface and mineral leases to Bay Petroleum Corporation on March 4, 1950 and Imperial had no further involvement with the Well. However the license to the Well was not formally assigned to Bay Petroleum until April 28, 1954. In my view nothing turns on this. [ 8 ] Public records show that the Well License was then transferred to Tennessee Gas Transmission Company, then known as Tenneco Corporation, and ultimately to the Property owner, Mr. Darling. In 1961, Tenneco contracted with Mr.

Darling to decommission, remove, and abandon the Well. [ 9 ] Crude oil was pumped from the Well between March 4, 1950 and January 30, 1957. Starting on July 13, 1958, the Well was used for salt water disposal. The Well was abandoned on June 26, 1961, by Mr. Darling. [ 10 ] At some stage, the Property was sold to William B. McEachren. Nothing turns on his ownership of the Property. [ 11 ] In 1965, Robert and Ernest Hiller (the Hillers) bought the Property from Mr. McEachren. In 1968, the Government of Alberta issued a Reclamation Certificate related to the satisfactory clean-up of the well site.

The Certificate was issued under the Surface Reclamation Act of 1963. Brookfield’s acquisition of the Property [ 12 ] Brookfield’s predecessor, Carma Developers Ltd. (Carma), met with the Hillers to discuss the purchase of some property for the purposes of residential development. The parties entered into a “handshake” deal for the Property in the fall of 2003. [ 13 ] As part of its due diligence, before entering into a formal agreement to purchase the Property, Carma retained Hoggan Engineering and Testing

(1980) Ltd. (also a Defendant in this action) to conduct a Phase I Environmental Site Assessment. A Phase I assessment is a preliminary study that does not include any investigation procedures of sampling, monitoring, analyzing or measuring.

It consisted of a historical investigation, site reconnaissance, review of known subsoil conditions, overview of neighboring operations, and search of municipal and other regulatory records, as described in the Hoggan Report attached as Exhibit G to the affidavit of Tom Lumsden, Brookfield’s corporate representative. [ 14 ] The Hoggan Report, issued November 10, 2003, concluded at p 9: There is no documentation from regulatory/authoritative bodies encountered that indicate land use or the storage of substances on site which would be conducive to site contamination.

As a result, the overall potential for environmental contamination at this site is considered to be low, and no further investigation is considered to be necessary. [ 15 ] The Executive

Summary similarly stated at page 1: The ESA-Phase I research into available information revealed no significant environmental concerns with respect to the subject

property. No further environmental assessment work is considered necessary for the subject property at the time of this report. [ 16 ] Within the Hoggan Report there were the following comments: In the 1950 air photo...in the northwest portion of the study site, some site disturbance is noted. The nature of this site disturbance is unknown, although in the photo it appears that several small storage buildings are present... Approximately 200 meters north of this western portion of the study site, a cleared area with an associated access road can be seen.

The configuration of this development is consistent with an oil lease or some similar activity. (pp 4-5) There were no areas of significant environmental concern noted in the air photos reviewed. In addition, the disturbance in the northwest portion of the site noted in the 1950 air photo is noteworthy. (p 5) One other activity with a slight environmental concern is the disturbance to the soil noted in the northwest portion of the site in the 1950 air photo, which was not noted previously in the 1920 air photo, or in any other subsequent air photo.

No explanation for this soil disturbance or the presence of small outbuildings is available at this time. However, these activities may be related to the possible oil lease activities which appear to be going on north of the study site in the 1950 air photo. Another possibility is that a second farm yard existed during the period between the 1920 and 1950 air photos. (pp 8-9) [ 17 ] Shaun Cranston, Senior Vice President of Brookfield (then with Carma), reviewed the Hoggan Report and, relying on the conclusions and recommendations, reported to Carma and Douglas Kelly (Senior Vice-President of Carma at the time).

Carma then executed an Offer to Purchase the Property from the Hillers. The offer was accepted and on February 10, 2004, the purchase was completed. The Hillers leased the Property back and continued to farm portions of the land until the lease was terminated on January 31, 2014 to allow for development by Carma. [ 18 ] In 2005 Carma distributed all its assets to Brookfield, and all the Brookfield assets were sold to Carma Developers LP (CDLP). In March 2011, CDLP changed its name to Brookfield Residential (Alberta) LP.

Property development [ 19 ] In 2006, Brookfield retained Stantec Consulting Ltd (Stantec) to support the development of the neighborhood plan. Stantec provided a Phase I Environmental Site Assessment for the Property and for two adjacent quarters (the November 2006 Stantec Report, Lumsden Affidavit, Ex K). The Stantec Report identified an abandoned crude oil well, a dry abandoned well, and an abandoned water disposal well. The first two were not within the Property but the abandoned water disposal well was.

The November 2006 Stantec Report did not note any adverse effects, but it did state: The former wells on the Subject Property ... should be located and further investigated for signs of contamination (Executive

Summary at p E.1 and 5.0 Areas of Special Concern at p 5.1). [ 20 ] In January 2008 (approximately 14 months later), Brookfield retained Ecomark Ltd, (another Defendant in this action), to conduct a Phase II Environmental Site Assessment of the Property in support of its application to the City of Edmonton to develop the Property as a residential subdivision. [ 21 ] Phase II Environmental Report work includes surficial and sub-surficial soil analysis, groundwater analysis, installing monitoring wells, and other tests considered appropriate following a Phase I Report. [ 22 ] Ecomark provided its Report (Ecomark Report) on January 24, 2008.

The Ecomark Report concluded that elevated soil absorption ratios, electrical conductivity and boron levels detected at the site were of no concern, but that a control borehole detected the presence of hydrocarbon contamination requiring “further delineation”. [ 23 ] In April 2008, Ecomark conducted additional soil testing and provided a follow-up report, saying at page 8: There were no hydrocarbon and boron exceedances in the follow up testing; and The impacts in the initial report were anomalous and no further testing was required. [ 24 ] From May 2008 to May 2010, Brookfield prepared the site for residential development until grading operations led to the report of strong and persistent hydrocarbon odour.

Brookfield, at Stantec’s recommendation, asked Stantec to conduct soil tests. The results of the soils tests were received on about June 14, 2010, and revealed that the hydrocarbons were at a level requiring site remediation. Between June and September 2010, Stantec also identified that the site was contaminated with salt, leading to the need for further remediation.

The evidence [ 25 ] There were seven affidavits sworn by six affiants: • Thomas Lumsden, Brookfield’s corporate representative, swore two affidavits on behalf of Brookfield on November 6, 2015 and September 2, 2016; • Shaun Cranston, Senior Vice President of Brookfield, swore an affidavit on August 29, 2016; • Douglas Kelly, a former executive of Brookfield, swore an affidavit on August 26, 2016; • Daniel Yoshisaka, a Stantec expert, swore an affidavit on behalf of Brookfield on September 19, 2016;

• Andy Biblow, corporate representative for Imperial, swore an affidavit on January 25, 2016; and • Robert Hiller, formerly a third party defendant, swore an affidavit in support of Imperial on September 23, 2015. [26] There are some controversies about the evidence given by Mr. Hiller, Mr. Kelly and Mr. Yoshisaka that will be addressedmore extensively within the body of these reasons, but I will provide a brief

summary of those issues here. [27] Brookfield points to conflicts between Mr. Hiller’s evidence and that of Mr. Cranston and Mr. Kelly, asserting that Mr.Hiller’s evidence is not credible. Brookfield highlights what it alleges to be inconsistencies in Mr. Hiller’s evidence that he told Mr.Kelly and Mr. Cranston about the Well. Both deny that such discussions took place. [28] Imperial challenges Mr. Yoshisaka’s expert evidence, arguing that he was not qualified to provide some of the expert opinionhe offered and further that, as an employee of Stantec, he lacks the required independence of a court expert.

Issues [29] The issues are: Should the Court extend the limitation period for Brookfield to bring the action under s. 218 of the EPEA? When did the alleged adverse effect of the contamination occur? Would the alleged adverse effect have been discovered sooner had Brookfield exercised due diligence and did Brookfield exercise duediligence? Would extending the limitation period prejudice Imperial’s ability to maintain a defence?

Summary dismissal application If the limitation period is not extended by the Court, should the claim be summarily dismissed? If the limitation period is extended by the Court, should the claim be dismissed based on some other basis? Cases [30] In support of their respective positions, the parties cited the following cases. Brookfield: Wainwright Equipment Rentals Ltd v Imperial Oil Limited, 2003 ABQB 898; Lakeview Village Professional Centre Corporation v Suncor Energy Inc, 2016 ABQB 288; WP v Alberta, 2014 ABCA 404; Windsor v Canadian Pacific Railway, 2014 ABCA 108; Access Mortgage Corporation

(2014) Limited v Arres Capital Inc, 2014 ABCA 280; Rai v 1294477 Alberta Ltd (Vinyl Retro Dance Lounge), 2015 ABQB 349; Beier v Proper Cat Construction, 2013 ABQB 351; 1214777 Alberta Ltd v 480955 Alberta Ltd, 2014 ABQB 301; Fletcher v Davidson & Williams LLP, 2015 ABQB 244; Owners: Condominium Plan No 0125764 v Amber Equities Inc, 2015 ABQB 235; R Floden Services Ltd v Solomon, 2015 ABQB 450; Infante v Dzogov, 2016 ABQB 41; 66292 Manitoba Ltd v Imperial Oil Limited, 2002 MBQB 145; Berendsen v Ontario 2009 ONCA 845 at para 25, rev’g on other grounds, (ON SC); Condominium Corporation No 0321365 v Cuthbert, 2016 ABCA 46 at para 35; and Cooperatieve Centrale Raiffeisen-BoerenleenBank BA (Rabobank International) v Liebig & Keown LLP, 2016 ABQB 417.

Imperial:

Environmental Protection and Enhancement Act, RSA 2000 c L-1 2; Jagar Industries Inc v Canadian Occidental Petroleum Ltd, 2001 ABQB 182; Wainwright Equipment Rentals Ltd v Imperial Oil Limited, 2003 ABQB 898; Lakeview Village Professional Centre Corporation v Suncor Energy Inc and Commonwealth Business Management Ltd, 2016 ABOB288; Johnson v Milton (Town), 2008 ONCA 440; Deemar v College of Veterinarians of Ontario, 2008 ONCA 600; Crombie v McColl-Frontenac, 2015 ONSC 6560, reversed 2017 ONCA 16; Bowes v Edmonton (City of), 2007 ABCA 347; Murphy Oil Company Ltd v Predator Corporation Ltd, 2006 ABCA 69; Beaver Hills Holdings Limited v Greenstreet Development Corp., 2013 ABCA 360; Hryniak v Mauldin, 2014 SCC 7; Windsor v Canadian Pacific Railway Ltd, 2014 ABCA 108; French v Chrysler, 2016 ONSC 793; Smith Brothers Excavating Windsor Ltd v Camion Equipment & Leasing Inc, [1994] OJ No 113; Floate v Gas Plus Inc, 2015 ABQB 725; White Burgess Langille Inman v Abbott and Haliburton Co, 2015 SCC 23; Abbott v Kasza, [1976] AJ No 628 at para 17 (ABCA); Tolofson v Jensen, (SCC); WP v Alberta (No 1), 2013 ABQB 295; Canadian (Attorney General) v Lameman, 2008 SCC 14; De Shazo v Nations Energy Company Ltd, 2005 ABCA 241; Bowes v Edmonton (City of), 2007 ABCA 347; 1317424 Ontario Inc v Chrysler Canada Inc, 2015 ONCA; Engemoen Holdings Ltd v 100 Mile House (Village), (BC SC), [1985] 3 WWR 47 (BSSC); James H Meek Trust v San Juan Resources Ltd, 2005 ABCA 448; and Boyd v Cook, 2013 ABCA 27.

Analysis Extension of the limitation period under s. 218 of the EPEA The jurisprudence to date [31] The relevant

section of the EPEA reads: 218(1) A judge of the Court of Queen’s Bench may, on application, extend a limitation period provided by a law in force in Alberta forthe commencement of a civil proceeding where the basis for the proceeding is an alleged adverse effect resulting from the alleged releaseof a substance into the environment.

(2) An application under subsection (1) may be made before or after the expiry of the limitation period.

(3) In considering an application under subsection (1), the judge shall consider the following factors, where information is available: (

a) when the alleged adverse effect occurred; (

b) whether the alleged adverse effect ought to have been discovered by the claimant had the claimant exercised due diligence inascertaining the presence of the alleged adverse effect, and whether the claimant exercised such due diligence;

(

c) whether extending the limitation period would prejudice the proposed defendant’s ability to maintain a defence to the claim on the merits; (

d) any other criteria the court considers to be relevant. [ 32 ] It is clear from the use of the word “may” that the Court is exercising discretion in deciding whether to extend the limitation period under this section.

Further, this discretion is relatively broad given the language in (3)(d). [ 33 ] Only four cases in Alberta have considered or applied this section: Jagar Industries Inc v Canadian Occidental Petroleum Ltd , 2001 ABQB 182 ; Wainwright Equipment Rentals Ltd v Imperial Oil Ltd , 2003 ABQB 898 ; Floate v Gas Plus Inc , 2015 ABQB 725 ; and Lakeview Village Professional Centre Corp v Suncor Energy Inc , 2016 ABQB 288 . [ 34 ] In Floate , Shell Canada Ltd brought an application for

summary dismissal and chose to contest the issue of causation rather than raise a limitations defence because of the potential under s. 218 to extend the limitation period (at para 5). 2001 ABQB 182 [ 35 ] In the other three cases, the plaintiffs sought to extend the limitation period for their claims against the alleged source of contamination. In Jagar , the plaintiff had purchased a 50 percent interest in the lands in question in 1979, and the other 50 percent in 1990. The defendant had operated a sour gas well on the site from 1958 to 1978. It abandoned the well and reclaimed the land. During the 1980s, Mr.

Jagar had conducted some investigations and some samples found some levels of soluble sulphate and corrosivity. In 1991, the defendant agreed to share responsibility for remediation. In 1996, Mr. Jagar sent the defendant an invoice for its share of the remediation costs, and the defendant denied any liability under the 1991 agreement. [ 36 ] The defendant defended in part on the limitation period, so Mr. Jagar brought the s. 218 application (then under s. 206.1, but the language is identical), without conceding that the limitation period had expired.

Kent J dismissed the application because the necessary expert evidence to show when the contamination adverse effect occurred, what Mr. Jagar ought to have known and done, and when it ought to have done was not provided to her. However, she held that either side could bring a further application pre-trial “if the issue can be argued in a manner more efficient than if it was left to trial” (at para 17). [ 37 ] In Wainwright , the Plaintiff had bought the land directly from the defendant, Imperial, in 1985.

Gasoline had been stored in underground tanks and, as part of the sales agreement, Imperial agreed to remove the tanks within 30 days after closing. It did not do so. In 1989, a fire prevention officer asked Wainwright to remove the underground tanks. Wainwright provided letters from Imperial from 1985 and 1989, stating that Imperial had removed the tanks. [ 38 ] In 1999, an environmental audit undertaken as part of an agreement to sell the property revealed that the tanks were still on the property, and there was associated contamination.

Wainwright filed its Statement of Claim against Imperial in 2001. [ 39 ] Ouellette J noted (at para 5) that the legislation was implemented to extend the limitation period “because the release of harmful substances into the environment may not be evident for several years,” (citing Alberta, Legislative Assembly, Hansard , 24th Leg, 2nd Sess, (April 6, 1998) at 1385). [ 40 ] The full quote from Hansard reads: This addition extends the period during which the civil proceedings can be initiated for damages to the environment. We think this is sensible for some harmful effects may not be evident for several years.

We’re seeing that occur on occasion. The amendment sets out the conditions that the judge must consider when deciding whether to extend the limitation period, so the system should not be open to abuse. [ 41 ] Imperial argued that there was insufficient evidence on the factors set out in s. 218, in particular evidence about nature, extent and when the alleged effect occurred; and when and what the plaintiff knew, or ought to have known, through reasonable due diligence about the adverse effect.

Ouellette J dismissed these concerns and distinguished Wainwright from Jagar because the plaintiff had known about the presence of the underground tanks all along.

In regards to the nature, extent, and timing of the adverse effect, he noted (at para 5): It is clear from the purpose of the legislation and the wording of the legislation, namely “where information is available,” that each factor need not be proven on a balance of probability. [ 42 ] Ouellette J also dismissed Imperial’s submission that there was insufficient evidence about the plaintiff’s due diligence, noting at para 11: When confronted in 1989 about the possibility of underground storage tanks, Wainwright Equipment exercised due diligence in contacting Imperial Oil to confirm whether or not they had in fact removed the underground storage tanks from the property.

The result of this inquiry was a cover letter from Imperial Oil dated March 27, 1989 confirming that the storage tanks had been removed, and attached to that letter is a letter dated July 15, 1985, confirming that the storage tanks were removed. [ 43 ] Ouellette J next concluded that there was no prejudice to Imperial because Imperial’s Affidavit of Records contained documents dating back to 1958. [ 44 ] Finally, he took into account, as “any other criteria that may be relevant”, the fact that had Imperial confirmed in 1989, when asked, that the tanks had not been removed, the plaintiffs could have sued on the 1985 contract within the six-year limitation period then in effect. [ 45 ] Based on these factors, Ouellette J extended the limitation period. [ 46 ] In Lakeview Village , Martin J (as she then was) developed a two-step process for analyzing applications under s. 218.

At

paras 18-19, she held: In my opinion, to justify moving ahead to trial under s 218, the plaintiff must meet a certain threshold on the s 218 factors. I believe the proper threshold is for the plaintiff to show a good arguable case. This requires the plaintiff to show that after consideration of the s 218 factors, their argument for an extension is grounded on some evidence and it is not fanciful: Scott & Associates Engineering Ltd. v. Ghost Pine Windfarm, 2011 ABQB 630 , 520 A.R. 190, at para 34 . In this vein, I propose the following two-step approach to use for s 218 applications: 1.

Is there sufficient evidence on the s 218 factors to grant an extension of the limitation period? 2. If there is not enough evidence to make that determination, or if there is sufficient evidence but an issue for trial could be determined prematurely, has the claimant shown a good arguable case for an extension?

If so, the claimant is entitled to an extension of the limitation period subject to a final determination of the issue at trial. [ 47 ] Martin J was concerned that findings under s. 218 might prematurely resolve issues that should be determined at trial, citing as an example the possibility that a finding that the plaintiff exercised due diligence in ascertaining adverse effect could influence findings on the degree of liability.

She suggested that this might be problematic if new facts and evidence emerge at trial that affect the due diligence analysis. [ 48 ] In support of this concern, she cited Kydd v Abolarin , 2011 ABQB 690 , and Dow Chemical Canada Inc v Nova Chemicals Corp , 2010 ABQB 524 , which are cases dealing with whether to defer a limitations defence in an amendment application to trial. In Kydd , the Court noted (at par 42 ) that it was not desirable to determine the merits of a limitation defence “where the matter is not clear and additional facts relevant to the issue may be adduced at trial”.

In Dow Chemical , Wittmann CJ noted (at para 16) that traditionally the Court has three options when the issue of limitations and an amendment arise: 1. Determine the limitation period has not expired and allow the amendment; 2. Rule the limitation period has expired and therefore consider s. 6 of the Limitations Act which provides for when an amendment can be made beyond the limitation period; or 3. Find that because of uncertainty in the evidence, the amendments should be allowed subject to the determination of the limitation issue at trial: Hill v. Hill, [2007] A.J.

No. 1515 (Q.B.) at para. 22 , aff'd 2007 ABCA 293 at para. 10 . [ 49 ] I note here that this approach may be appropriate where there is a stand-alone s. 218 application, but here there is the cross- application for

summary dismissal, and the parties are required to put their “best foot forward” ( Pyrrha Design Inc v Plum and Posey Inc , 2016 ABCA 12 at para 14 ). Therefore, the risk of a premature finding because additional facts might be adduced at trial is not as significant. [ 50 ] In Lakeview Village , Martin J granted the application to extend the limitation period subject to further evidence that might change the analysis at trial. In her analysis, she discussed the various factors, beginning with when the alleged adverse effect occurred.

She found the plaintiff’s contention that the contamination occurred during the period a gas station operated on the site to be plausible, suggesting a time frame from 1969 to the mid-1980s.

She concluded that the time frame here was not so long ago that it would be unfair to proceed, noting that in Wainwright the gas station operated between 1958 and 1965. [ 51 ] I note here that the timing of the gas station’s operation in Wainwright did not appear relevant to Ouellette J’s decision, since the limitation period arose from Imperial’s failure to remove the tanks in 1985, and Ouellette J found that it was not possible to determine when the underground contamination of the soil commenced (at para 6). [ 52 ] Martin J concluded that Lakeview exercised due diligence because it sought a report on the site’s environmental status as a condition of the purchase.

That report concluded there was no evidence of significant contamination and no further investigation was warranted.

She concluded (at para 41): “The Report was done by professionals and there was no reason for Lakeview to question the Report or suspect it was being misled or tricked.” [ 53 ] Neither of the defendants in Lakeview Village presented any evidence of prejudice. [ 54 ] Martin J concluded at para 56: Based on the foregoing analysis, this appears to be the type of case contemplated by s 218, where the harmful effects of contamination were not evident for a number of years, due diligence was shown, and there is no prejudice to the defendants.

However, there are some merits-based implications on due diligence that preclude an outright extension. Accordingly, I find Lakeview has shown a good arguable case on the s 218 factors, and grant an extension of the limitation period subject to a final determination of the issue at trial. Timing of the adverse effect [ 55 ] Relying on Mr. Yoshisaka’s report, Brookfield argues that the contamination occurred in 1949, but concedes that it is possible that the adverse effect occurred sometime after 1949.

Brookfield contends that the fact that the adverse effect may have occurred as early as 1949 should not be a factor against granting an extension, since in Wainwright the contamination could have occurred as early as 1958 and in Lakeview as early as 1969. [ 56 ] Imperial argues that there is no evidence of when the alleged adverse effect occurred, submitting that the Court should give no weight to Mr. Yoshisaka’s evidence. In particular, Imperial notes that Mr.

Yoshisaka’s evidence ignores the fact that the Well produced oil until January 1957, was later used for salt water disposal beginning in July 1958, and was ultimately decommissioned and abandoned in June 1961. The adverse effects may thus have occurred after Imperial ceased to have an interest in the Property and any control over

it, even on Brookfield’s evidence. [57] Further, Imperial argues that Mr. Yoshisaka is providing evidence outside of his expertise and that as an employee of Stanteche does not meet the required standard of independence, relying on White Burgess Langille Inman v Abbott and Haliburton Co, 2015SCC 23 at para 49. [58] Mr. Yoshisaka is a geoenvironmental engineer with a Bachelor of Science degree in Civil Engineering and a Master ofScience degree in Environmental Engineering. His expertise is in hydrogeology, dealing with the distribution and movement ofgroundwater.

Imperial notes that he has no experience related to oil and gas drilling or the production and dating of hydrocarbons.Brookfield notes that Mr. Yoshisaka’s evidence is that he had some experience in dating hydrocarbons. He has no expertise in drilling oilwells. [59] Brookfield relies on Mr. Yoshisaka’s CV and argues that he is an experienced geoenvironmental engineer responsible forhydrogeologic assessments, site remediation, environmental risk management, and environmental impact assessments.

He also hassignificant regulatory experience and management of groundwater issues at chemical manufacturing facilities, oil and gas facilities,bitumen production facilities, wood preservation facilities, and municipal facilities. He has also worked on contaminated siteinvestigations (Yoshisaka affidavit at Ex. A). [60] Mr. Yoshisaka has some expertise in relation to groundwater contamination related to oil and gas facilities, site remediation,and environmental risk management. In my view, Imperial’s arguments against his expertise go to weight, not admissibility. I amprepared to accept Mr.

Yoshisaka’s expertise in the matters on which he expresses an opinion. There is no evidence to the contrary by acompeting expert, so any possible shortcomings in Mr. Yoshisaka’s level of expertise are not in issue. [61] As to independence, Brookfield notes that Mr. Yoshisaka’s employer, Stantec, is a third party defendant, having been broughtinto this action by Imperial. Stantec would benefit if the claim against Imperial is dismissed, making Mr. Yoshisaka’s opinions in supportof Brookfield less suspect. This engages the Talmudic principle of miggo, used by Veit J in Freeland v Freeland, (ABQB).

Roughly restated, the principle is that a witness is more likely to be telling the truth if his evidence contains some thingsharmful to his position, contrasted to a witness’s testimony that contains no self-deprecating or harmful things. [62] I see no evidence that supports Imperial’s concerns about Mr. Yoshisaka’s independence and conclude that he is bothqualified and independent. [63] However, I do not accept Mr. Yoshisaka’s conclusion that the contamination occurred in 1949.

In his report, he notes that thehistorical records indicate that a series of drill stem tests produced varying amounts of hydrocarbons, water-containing gases, and saltwater. The records do not indicate what happened to these fluids, but the common practice at the time was to divert these fluids to thedrilling sump or a flare pit. He suggests that the drilling and initial operations of the well site were the most likely original source ofcontamination. In my view, this is merely speculation supported by virtually no evidence, and Mr.

Yoshisaka’s opinion ignores the yearswhen the Well was a flowing oil well and the years when it was used for salt water disposal. [64] In my view, at least for the purposes of the s. 218 application, I find there is insufficient evidence to determine when theadverse effect occurred. [65] That does not end the matter. As noted by Ouellette J in Wainwright, (at para 5): Section 218(3) states that I shall consider the following factors: “...where information is available (

a) when the alleged adverse effectoccurred.” It is clear from the purpose of the legislation and the wording of the legislation, namely “where information is available,” thateach factor need not be proven on a balance of probability. This is also apparent by the inclusion of 218(3)(

d) which states, as one of thefactors, “any other criteria the court considers to be relevant.” Due Diligence [66] Brookfield says that it exercised due diligence and that it reasonably relied on the Hoggan Report to conclude that no furtherinvestigation was necessary before buying the Property. Imperial submits that Brookfield should have been alerted to issues by thereferences in the Hoggan Report to soil disturbances.

Having reviewed the Report, I conclude that it was reasonable for Brookfield torely on the Report’s recommendation that no further investigation was necessary, when it decided to purchase the property. [67] Undoubtedly, Brookfield could have done more at the time other than commission a Phase I report. But it engaged anapparently qualified expert and relied on that expert’s advice. Hindsight should not be used to judge the exercise of due diligence at thetime it was exercised. [68] Imperial also relies on the affidavit evidence of Mr. Hiller who deposed that he told Mr. Cranston and Mr.

Kelly that therewas a well and a battery on the Property. Both Mr. Cranston and Mr. Kelly denied, both in their affidavits and in questioning on theiraffidavits, that Mr. Hiller told them about either an oil well or a battery on the Property. [69] In its argument, Brookfield undertook a significant analysis as to why Mr. Hiller’s evidence should not be accepted, assertingthat had either Mr. Kelly or Mr. Cranston been told of the existence of the Well, Carma would have undertaken significantinvestigations, as was its consistent practice when acquiring properties for development. [70] Mr.

Hiller’s evidence was that Mr. Kelly had no reaction or response to this information when he told him about the Well attheir 2003 dinner (when the “handshake” deal was entered into). Brookfield argues that this evidence is illogical. Anyone in Mr. Kelly’sposition would have asked additional questions. [71] Mr. Hiller’s evidence was also that Mr. Kelly contacted him after the environmental assessment (presumably the HogganReport) to ask him about an aerial photo and whether there were farm buildings on the northwest portion of the Property. He says he told

Mr. Kelly the buildings on the site would be a “battery”. Mr. Kelly denies this conversation and says that if this conversation hadoccurred, he would have shared the information with co-workers at Carma, including Mr. Cranston. [72] Mr. Hiller also said that he told someone taking soil samples on the Property about the Well, and that was sometime before hespoke to Mr. Kelly about the aerial photo. However, the evidence is clear that the only soil samples taken were in 2008. [73] Additionally, Mr. Hiller’s evidence was that before the closing of the sale to Carma, Mr.

Kelly contacted him about a caveatby Imperial, and Mr. Kelly asked him if the caveat related to the oil well or the right-of-way. However, the only caveat on the Propertywas a utility right-of-way registered in 2002. [74] Mr. Hiller’s further evidence was that Mr. Kelly called someone to have the caveat removed before the deal closed as part ofthe requirements of the sale. In fact, the caveat was listed as a permitted encumbrance in the Offer to Purchase. As well, the caveat waswithdrawn months after the closing and was replaced on the same date with the priority of the original caveat. [75] Mr.

Hiller’s evidence was also that he toured someone around the Property, whom he believed to be Mr. Cranston. There aresome inconsistencies in his evidence between his affidavit and questioning on it as to whether the tour was in a car or a truck. That is toominor to be of consequence. In any event, Mr. Cranston denied touring the Property with Mr. Hiller. Mr. Hiller’s evidence was that hetold this person about the Well and the battery. Mr. Cranston denies any discussion with Mr. Hiller about an oil well or oil well site. [76] Mr.

Cranston’s affidavit evidence is that in his experience Carma and Brookfield would never purchase potential developmentlands if there was a potential contamination issue. Had either Mr. Cranston or Mr. Kelly been told there had been an oil well on theProperty, they would have directed Hoggan to conduct further investigations. [77] There are clearly disputes on these facts. Credibility is at issue.

Our Court of Appeal has indicated that it is an error todetermine a matter on the basis of conflicting affidavits and documents that support either party’s position: Charles v Young, 2014ABCA 200 at para. 4; Condominium Corp. No. 0321365 v Cuthbert, 2016 ABCA 46 at para 28.

The conflict on the facts must bematerial. [78] However, there are occasions when a chambers judge may rule against an affiant’s credibility when that evidence “flies in theface of the balance of the record” (Dagher v Glenn, 2016 ABCA 38 at paras 30-2; Pioneer Exploration Inc. (Trustee of) v Euro-AmPacific Enterprises Ltd, 2003 ABCA 298 at para 25-6; Rogers Cable TV Ltd v 373041 Ontario Ltd (1994), (ON SC),22 OR (3d) 25 (Gen Div). [79] In Klein v Wolbeck, 2016 ABQB 28 at para 26, the Court of Appeal noted: 26 Furthermore, the weight of affidavit evidence may properly be found to be reduced if, for example, the evidence is not consistentwith other evidence and known circumstances: Compton Petroleum Corporation v Alberta Power Ltd, 1999 ABQB 42 at para 14; see N.V.

Reykdal & Associates Ltd 2000 ABCA 330 , [2000] A.J. No. 1576 at para 5; Janvier v 834474 Alberta Ltd, 2010 ABQB 800at para 15; Faryna v Chorny, (BC CA), 1951 CarswellBC 133, [1952] 2 D.L.R. 354, O’Halloran JA at para 8(CarswellBC). That is to say, common sense need not be abandoned in the face of an allegation in an affidavit. Allegations are notentitled to weight just because they are included in an affidavit. [80] In my view, earlier cases should now be read in the context of Hryniak v Mauldin, 2014 SCC 7, and the fresh approach tosummary proceedings mandated under it.

The balance of the record before me suggests that Mr. Hiller was mistaken in his recollections.Mr. Kelly and Mr. Cranston were alert to the risks of environmental contamination or they would not have retained Hoggan. I accepttheir evidence, unshaken in questioning, that the conversations Mr. Hiller remembers never happened. There are internal inconsistenciesin Mr. Hiller’s evidence, including the suggestion that he told someone during the taking of soil samples about the Well before the sale,when soil samples were not taken until after the sale.

As well, his evidence about the caveat is inconsistent with the timing of the caveatremoval. [81] It is unnecessary in these circumstances to require that the discrepancies between Mr. Hiller’s testimony and that of Mr. Kellyand Mr. Cranston go to trial to be resolved. [82] I conclude that neither the Hoggan Report nor Mr. Hiller’s evidence reveals a lack of due diligence. [83] I am concerned about the lack of due diligence after the November 2006 Stantec Report.

While that Report did not indicatethere was any contamination or any adverse effects, it did state: The former wells on the Subject Property ... should be located and further investigated for signs of contamination (Executive

Summaryat p E.1 and 5.0 Areas of Special Concern at p 5.1). [84] The next step Brookfield took was not until January 2008. It retained Ecomark to undertake a Phase II Environmental SiteAssessment, in support of its application to the City of Edmonton to develop the Property as a residential subdivision. The January 24,2008 Ecomark Report concluded that elevated soil absorption ratios, electrical conductivity and boron levels detected at the site were ofno concern, but that a control borehole detected the presence of hydrocarbon contamination requiring “further delineation”.

That follow-up revealed no hydrocarbon and boron exceedances, and concluded that the impacts in the initial report were anomalous and no furthertesting was required. [85] Yet it was not until 2010, when the smell of hydrocarbons became obvious, that further investigations by Stantec revealed thecontamination and the adverse effects. [86] The rationale underlying this factor was briefly addressed by Kent J in Jagar at para 16: S. 206.1(3) specifies three considerations I ought to weigh. In the context of this case, (

a) and (

b) namely the timing and nature of the

adverse effect, need to be balanced against (c), namely any prejudice to the defendant. [87] Given that Imperial’s involvement in the Well ended either in 1950 or 1954, the question of whether Brookfield should havetaken action in 2006 or 2010 is less decisive.

Arguably, even if Brookfield had sought a Phase II Environmental Site Assessment after theNovember 2006 Stantec Report, the results might not have been any different than the Phase II Environmental Site Assessmentperformed by Ecomark. [88] I conclude that, for the purposes of the s. 218 application, that there is evidence that Brookfield exercised due diligence inassessing whether there had been adverse effects to the Property.

Prejudice [89] The final factor is whether there is prejudice to Imperial in extending the limitation period. [90] Brookfield says that Imperial led no evidence that it would be prejudiced in maintaining a defence on the merits. It has notidentified lost witnesses or documents, and in fact Imperial has access to all the testing data and analysis collected and performed. It alsohad the ability to participate in the remediation. [91] Imperial says the lapse of time is by itself evidence of prejudice.

It lists the loss of key witnesses, key documents and records,loss of ability to test and analyze the contaminated earth itself, loss of ability to obtain expert witnesses on the standard of care at thetime, and the loss of the ability to assess causation between various potential sources of contamination. [92] Imperial also relies on the decision in Bowes v Edmonton (City of), 2007 ABCA 347, in relation to the virtual impossibilityof obtaining expert evidence on standard of care from 40 years ago (at paras 127-28): The law and history agree that it is counterproductive and unjust to judge people’s conduct by rules or standards which only came intoforce years after that conduct.

A well-known defence to a negligence suit is compliance with the methods and standards generallyfollowed in that profession or industry. But that means followed then, not today. Precautions adopted later are irrelevant. For engineers,see Campion and Dimmer, Professional Liability in Canada (loose-leaf, 2001 release), pp. 6-21 and 6-23. The rule is the same forphysicians: ter Neuzen v. Korn (SCC), [1995] 3 S.C.R. 674, 188 N.R. 161 (para 34). And other medical agencies:Walker Est. v. York Finch Gen. Hosp., 2001 SCC 23, [2001] 1 S.C.R. 647, 268 N.R. 68 (para. 4).

Both sides, especially a defendant, will have to call evidence on that topic. It should come from someone with 10 or 20 years’ experiencein that field even before the events in question. But few people practise a profession more than 40 years. So if the events are more than30 years old, it becomes almost impossible to call evidence of negligence or due care. If the events are more than 40 years old, totallyimpossible.

It is not surprising that no such evidence was attempted here. [93] Here we are dealing with events that occurred more than 60 years before this action was commenced. [94] The Supreme Court has discussed the policy behind limitation periods in Canada (Attorney General) v Lameman at para 13: The policy behind limitation periods is to strike a balance between protecting the defendant’s entitlement, after a time, to organize hisaffairs without fearing a suit, and treating the plaintiff fairly with regard to his circumstances.

This policy applies as much to Aboriginalclaims as to other claims, as stated at para. 121 of Wewaykum: [95] Witnesses are no longer available, historical documents are lost and difficult to contextualize, and expectations of fairpractices change. Evolving standards of conduct and new standards of liability eventually make it unfair to judge actions of the past bythe standards of today. [96] Recently, the Supreme Court described this rationale more fully in Canadian Imperial Bank of Commerce v Green, 2015SCC 60.

There, Karakatsanis J (for Moldaver and Gascon JJ) stated at para 207: ... the recognized policy rationales for the limitation period, and for limitation periods generally: protecting the defendant from liabilityfor ancient obligations, putting the defendant on notice of the claims against her, guaranteeing the preservation of relevant evidence, andensuring that plaintiffs act in a timely manner (M. (K.) v. M. (H.), (SCC), [1992] 3 S.C.R. 6, at pp. 29-30; Novak v.Bond, (SCC), [1999] 1 S.C.R. 808). [97] I find this factor to be the most determinative.

Although Brookfield points to the decisions in Wainwright and LakeviewVillage, I note that the relevant time frame in the Wainwright case was not the time the tanks were installed, but when Imperial allegedlyfailed to remove them – considerably more recent. It was also not a question of expert evidence but merely a question of whetherImperial had an obligation to remove the underground tanks and whether it did so. [98] In Lakeview Village, the contamination again likely arose from the operation of a gas station that operated from 1969 to themid 1980s, a more recent time period and an ongoing cause of action.

Moreover, neither Defendant alleged prejudice in that case. Atissue there was whether the contamination and adverse effect were from the underground tanks on the site or from another adjacent gasstation. Questions concerning the standard of care would likely be very different than those in this case.

Here, the issue would be thestandard of care in drilling oil wells and dealing with waste fluids in 1949, only two years after the discovery of oil in Leduc. [99] Imperial says it cannot even point to specific missing witnesses or missing documents, and this goes to the heart of theprejudice that it will suffer if this matter proceeds. More than 60 years later, Imperial does not know who could have once spoken tothese events or who could have identified the specific relevant records.

It says that to date, it has not located anyone who could speak tothe drilling of the Well in 1949, the operation of the Well between 1950 and 1957, the use of the Well for salt water disposal beginningin 1958, or the abandonment and decommissioning of the Well in 1961. Here, the end of the Well’s lifespan was in 1961, more than 50years before the date the action was commenced.

[ 100 ] I am satisfied that Imperial has established prejudice in the event the limitation period is extended. Should the limitation period be extended? [ 101 ] Using the framework established by Martin J in Lakeview Village , I am satisfied that there is sufficient evidence before me on which to balance the factors in s. 218. While there is some doubt about when the alleged adverse effect occurred, there is sufficient evidence to conclude that it occurred sometime between 1949 and the Well abandonment in 1961. I find that Brookfield has exercised sufficient due diligence.

However, I also find that Imperial will suffer significant prejudice if I were to extend the limitation period. [ 102 ] While the Legislature has given the Court the discretion to extend the limitation period for actions related to environmental contamination, it has provided a number of specific factors to consider, including prejudice to the Defendant.

Keeping in mind that the purpose of balancing these interests is clearly to ensure that the system is not open to abuse, I find that permitting an action to go ahead more than 60 years after the Defendant last was involved in the Well would be an abuse. [ 103 ] The Plaintiff has sued in negligence, requiring evidence of standard of care, among other things. Calling the expert evidence required to establish the standard of care 60 years later would be, in the words of our Court of Appeal, “impossible”. [ 104 ]

Section 218 also speaks of additional factors as the Court might find relevant. There are no additional factors here that persuade me to extend the limitation period despite the prejudice to Imperial. Additional factors might include an element of deceit, as was the case in Wainwright . Concealment might also be a factor. Evidence of gross negligence or recklessness might also be persuasive. [ 105 ] Here, the evidence put forward by Brookfield does not suggest any of this.

Indeed, their expert suggests that Imperial may have followed prevailing practices or standards when the Well was drilled in 1949. [ 106 ] Undoubtedly, close analysis might indicate that the prevailing practices were negligent, but that would appear to be the result of hindsight and a fundamentally different approach to environmental protection. Reclamation was not statutorily required until the enactment of the Surface Reclamation Act in 1963. Alberta’s first comprehensive environmental protection statute was not passed until 1971 (and was the first in Canada).

It would, in my view, be unfair to consider the appropriateness of 67-year-old practices without reliable evidence of what the practices were then. [ 107 ] It is also significant that the Alberta Government issued a reclamation certificate for the Well in 1968.

That is compelling evidence that the practices at least in reclaiming the lands involved were in accordance with standards prevailing at that time. [ 108 ] While it may be tempting to hold those responsible for environmental contamination accountable for their deeds, that objective must be tempered with fairness and a recognition of sound bases for limitation periods. [ 109 ] This case does not meet the threshold for reaching back decades after the limitation period expired. [ 110 ] Ironically, Alberta’s Limitations Act , enacted in 1996, expanded discoverability, but also provided a ten-year ultimate limitation period that precludes undiscoverable claims (other than those fraudulently concealed) from proceeding if more than ten years has passed since the impugned conduct.

That ultimate limitation period is not found in some other Provinces’ limitation legislation, but it is the law of Alberta.

Summary dismissal The test of

summary dismissal [ 111 ]

Summary judgment or dismissal is available under r 7.3 of the Alberta Rules of Court, which reads: 7.3(1) A party may apply to the Court for

summary judgment in respect of all or part of a claim on one or more of the following grounds: … (

b) there is no merit to a claim or part of it… [ 112 ] In Hryniak v Mauldin , 2014 SCC 7 , the Supreme Court of Canada broadened the scope of

summary judgment under the newly amended Ontario rules, and our Court of Appeal in Windsor v Canadian Pacific Railway Ltd , 2014 ABCA 108 , adopted those new principles, described as a cultural shift, as being applicable in Alberta.

In particular the cultural shift included the following: • Trials are not the inevitable conclusion for litigation matters; • Using and simplifying pre-trial procedures can promote timely and affordable access to the civil justice system; • A trial is not required if an alternative procedure permits a judge “to make the necessary findings of fact, to apply the law to those facts, and is a proportionate, more expeditious and less expensive means to achieve a just result” ( Windsor at para 13 ); •

Summary judgment rules should be read broadly to favour proportionality and access. [ 113 ] In Hyrniak the Supreme Court said at para 49: There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for

summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result. [ 114 ] In Windsor , at para 13 , the Alberta Court of Appeal formulated the test as: The modern test for

summary judgment is therefore to examine the record to see if a disposition that is fair and just to the parties can be made on the existing record. [ 115 ] 776826 Alberta Ltd v Ostrowercha , 2015 ABCA 49 held at para 13 : The question is whether there is in fact any issue of ‘merit’ that genuinely requires a trial, or conversely whether the claim or defence is so compelling that the likelihood it will succeed is very high such that it should be determined summarily. [ 116 ] In Stout v Track , 2015 ABCA 10 , the majority noted at para 2 that the standard of proof under the old and new test are essentially the same: Whether reviewed under the former test or the newer test, the appellant has not demonstrated any palpable and overriding error in the chambers judge’s conclusion.

Indeed, it should follow that if there was no genuine issue for trial, there would be no merit to the claim. [ 117 ] Brookfield points to various descriptions of the degree of certainty necessary for

summary dismissal, asserting that the standard is high. I accept that concluding there “is no genuine issue for trial” or “no merit to the claim” sets a high standard. [ 118 ] I do not think it is helpful to try to assign some numerical value to this standard.

It is a question of assessing whether the record permits the Court to make the necessary fact findings and applicable law in order to reach a fair and just determination. [ 119 ] Both parties are expected to put their best foot forward ( Pyhrra Design ), and the onus is on the applicant to show there is no genuine issue for trial ( Abbey Lane Homes, a division of B&R Development Corp v Cheema , 2015 ABCA 173 (at para 20 )).

Limitation Period [ 120 ] I have refused Brookfield’s application to extend the limitation period. [ 121 ] Imperial asserts that the claim against it should be dismissed as outside the ultimate limitation period of ten years. [ 122 ] Brookfield’s only response to the limitation issue is its s. 218 application. It did not allege any contamination after Imperial’s involvement with the Property and Well ended.

The Amended Statement of Claim alleges that Imperial breached its duty to Brookfield by • Drilling and operating the Well improperly; • Failing to prevent, contain, remove and otherwise remedy the alleged contamination after it occurred, and • Failing to respond when Brookfield alerted it to the presence of contamination. [ 123 ] The ten-year limitation period began to run from the date the plaintiff’s claim arose, and discoverability is not relevant to the ultimate limitation period.

The drilling and operation of the Well occurred in 1949 and 1950, well outside the ultimate limitation period. [ 124 ] Brookfield led no evidence that established a continuing obligation on Imperial to prevent, contain or remove the contamination. Any such obligation would have ended when Imperial transferred its interests to Bay Petroleum, and as Imperial notes, after that point in time it had no right to access the well site. [ 125 ] Imperial also argues that it had no obligation to remediate the Property, since Brookfield accepted that obligation when it purchased the Property “as is”.

In any event, such obligation could only relate to Imperial’s alleged improper drilling and operation of the Well in 1949-50, and Brookfield cannot bootstrap a new obligation on an old obligation that it cannot enforce. [ 126 ] Accordingly, I grant Imperial’s application for

summary dismissal as there is no merit to the claim. Heard on the 30 th day of November, 2016. Dated at the City of Edmonton, Alberta, this 28 th day of March, 2017. Robert A. Graesser J.C.Q.B.A.

Appearances: Darin J. Hannaford and Debra Curcio Lister Miller Thomson LLP for the Plaintiff Alexandra C. Bochinski and Craig Brusnyk DLA Piper (Canada) LLP for the Defendant Imperial Oil Limited